Mexico warns of tariffs, spurns U.S. aid under review by Trump
| Reuters

MEXICO CITY An emboldened Mexico hardened its opposition to President Donald Trump on Friday by saying it would retaliate if the United States imposed a border tax and that it can afford to lose financial aid that might be pulled to pay for a border wall.Foreign Minister Luis Videgaray said Mexico could respond to any tax the United States were to unilaterally impose on imports from its southern neighbour to finance the wall with levies on select goods, aimed at U.S. regions most dependent on exports south of the border."Without a doubt, we have that possibility, and what we cannot do is remain with our arms crossed," Videgaray said in a radio interview. "The Mexican government would have to respond."The statements by Videgaray and Interior Minister Miguel Angel Osorio Chong, who minimized the potential impact of the rumoured loss of U.S. security aid, toughened the defiant tone from Mexico since President Enrique Pena Nieto last month cancelled a trip to meet Trump over the wall dispute.Mexicans are angry at Trump's calls for U.S. firms not to invest south of the border, insults to immigrants and threats to make Mexico finance the border wall. The peso currency has weakened on concerns he will hurt Latin America's No. 2 economy. Pena Nieto had faced criticism he was too accommodating with Trump but got a much needed ratings boost after cancelling the summit. A plan to deport third-country nationals to Mexico fuelled outrage this week.Mexican officials were publicly blunt with U.S. Secretary of State Rex Tillerson and Homeland Security John Kelly over Trump's immigration and trade proposals in a visit to Mexico on Thursday. Videgaray said the trade strategy would replicate a 2009 campaign of retaliatory tariffs that helped Mexican win a dispute with the United States. On Wednesday, the minister mentioned Iowa, Texas and Wisconsin as states that could be targeted in a conversation with lawmakers leaked to two newspapers.

"This is not our preference," he said. "Mexico believes in free trade."NO HANDOUTS PLEASE
A U.S. executive order on Jan. 25 that mandated the construction of a border wall also required government agencies to report the financial assistance they gave Mexico in the past five years, leading to speculation Trump wants to redirect the aid to pay for its construction.

Interior Minister Osorio Chong said on Friday that Mexico had no need for such financial aid from the United States, signalling that it would not come close to paying for the estimated $21.6 billion cost of the wall. Like in other middle-income emerging economies, many in Mexico consider it humiliating to take aid from wealthy countries.A large part of U.S. aid to Mexico comes through the Plan Merida programme, under which the U.S. Congress allocated $2.6 billion to security assistance between 2008 and 2016. Of that, $1.6 billion had been disbursed by November 2016, according to the U.S. Congressional Research Service.

"When they realise what's left of Merida, they will understand that it's not even that significant," Osorio Chong told local radio."We don't object to them moving these resources... Mexico now has its own capabilities," he said.The U.S. Customs and Border Protection agency said on Friday it will accept proposals next month for the design of Trump's wall, a first step in picking vendors.Videgaray said a meeting of Tillerson, Kelly and Pena Nieto in Mexico City was a short courtesy visit. He said in a more substantial meeting of the ministers, Kelly told him that deportations of undocumented immigrants from the United States would not be militarised, after Trump characterized the process as a "military operation." (Reporting by Frank Jack Daniel, Christine Murray and Alexandra Alper; Editing by Dan Grebler and Cynthia Osterman)

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